New opportunities for ESG

Written by: Pieter van den Berg

The end of the year is often used to present awards to companies that have made exceptional achievements. This happens regionally, but at the national level, numerous companies are also highlighted for their extraordinary achievements. Moreover, more and more awards are being given in the area of sustainability.

This phenomenon also affects the takeover market. In December, the M&A Awards are presented. Here, several awards are given to advisors who have made outstanding achievements in acquisitions this year. Think of awards for best deal, best dealmaker, best private equity fund, and also the “best diversity team. You may already be familiar with these awards from your own industry.

ESG (Environment, Social and Governance) has influenced almost all business models in all sectors. Sustainability is part of ESG and concerns all entrepreneurs. It also plays a crucial role in the acquisition market, which makes sense because investments and acquisitions are made based on expectations that can create value in the future.

Annually, Ansarada conducts research on developments in the takeover market. That research has shown that decision makers and advisors involved in acquisitions consider ESG essential to future transaction practice.

Private equity parties expect ESG to be one of the top three drivers of the acquisition market in the coming years. In short, ESG has now become indispensable in the world of acquisitions, and we already have the first ESG due diligence studies underway.

For the takeover market, ESG acts as an additional driver, in part due to new European regulations: the Corporate Sustainability Due Diligence Directive (CSDD), whose goal is to identificate, prevent, mitigate and terminate potential negative impacts of business activities on human rights and the environment. This is affecting markets, with scale becoming even more important. A wave of acquisitions is already evident in the accounting industry. Almost daily, firms are acquiring or merging to better respond to increased regulation and the promotion of quality.

In short, ESG offers new opportunities for many entrepreneurs. I can already see the INTO business ESG Award coming….

This article was originally published in INTO business magazine.